Rapaport Weekly Market Comment

Dealers preparing for Las Vegas shows. Polished inventory rising due to
slow trading. Prices firm, but buyers pushing for generous credit terms and
taking more goods on memo. Signet Jewelers raises consignment intake +6% to
$606M at end of FY2018. Chinese consumer sentiment improving as 1Q gold, silver, jewelry sales +8% to $11.7B.
Rough market stable ahead of De Beers and Alrosa sights and Antwerp
Rough Diamond Days. Lucara 1Q revenue -3% to $25M, loss of $7M. Belgium April
polished exports -7% to $728M, rough imports +43% to $933M. Hong Kong 1Q
polished imports +10% to $5.2B, polished exports +4% to $2.4B. Alrosa mulls
Kristall Smolensk acquisition to expand polished division.

Fancies: Fancy shapes mixed, with curves better than
squares. Ovals hot, followed by Pears and Cushions. Marquises and Princesses weak. Oversizes selling well. Steady demand for
fine-quality 6-10 ct. Ovals, Pears and Emeralds, with limited supply. US
supporting market for commercial-quality, medium-priced fancies under 1 ct. Far
East demand improving as consumers seek fancy shapes at better prices.
Off-make, poorly cut fancies illiquid and hard to sell, even at very deep
discounts.

United States: Improved activity on 47th Street.
Prices firm as dealers strive to protect margins on goods they bought when the
market was stronger earlier in the year. Commercial-quality 1 ct., G-J, VS-SI
diamonds stable. Better demand for larger diamonds above 3 ct. Rising
expectations for Las Vegas shows.

Belgium: Polished
trading stable, but dealers cautious ahead of the quieter summer months. Steady
orders for 1-3 ct., G, VVS-SI1 diamonds. Collection goods relatively slow.
Lower colors improving, particularly for 3-5 ct. diamonds. Carat+ show
generates interest on the first day, but overall buyer attendance weak. Dealers
frustrated by banks’ unwillingness to work with the diamond industry.

Israel: Sluggish sales, with buyers having difficulty matching
suppliers’ higher asking prices. Inventory levels rising. Dealers concentrating
on moving stock via memo and online sales. Solid demand for 1 ct., J-L, VS and
1 ct., H-K, SI2-I1. Rough market steady.

India: Sentiment weaker amid various bankruptcy rumors. Some
dealers still on vacation. Fewer foreign buyers in Mumbai. Dossiers moving well
in all categories. Some interest in 0.50 ct. piqué diamonds. Stars and melee
slower. Rough trading good, but factories have reduced polished production.

Hong Kong: Dealer market quiet. China shifting to lower colors.
Some buyers moving to VS due to shortage of nice SIs. Strongest category is 1
ct., G-H, VS-SI. Retail improving, but local jewelers struggling to compete
with lower-priced online platforms, turning to custom-made pieces to
differentiate their offering. Fancy colors and shapes providing retailers with better
margins than round, colorless diamonds.